OTTAWA — Canada claimed a small moral victory Monday in the latest round of the longrunning, multibillion-dollar softwood lumber dispute with the United States. The World Trade Organization sided with Canada and ruled that the U.S. has failed to prove some of its claims that certain softwood lumber exports have been unfairly subsidized.

Those allegations of subsidies - long denied by Canada -- are a key reason used by Washington to collect crippling duties now totalling almost $5 billion on softwood exports, severely wounding this country's industry.

Trade officials in Ottawa said this latest ruling won't end the dispute but should give Canada a boost in its lengthy battle to end the duties collected by Washington since mid-2002.

"We are pleased that the WTO compliance panel has agreed with Canada on the central issue in this case and found that the U.S. imposition of countervailing duties continues to be in violation of U.S. WTO obligations," Trade Minister Jim Peterson said Monday in a statement.

Canada has been fighting the combined countervail and antidumping duties through legal channels as well as in high-level negotiations, which are expected to resume later this month.

The U.S. lumber lobby, which has accused its Canadian rivals of being heavily subsidized, dismissed Monday's ruling as a "technical matter" that's largely irrelevant to overall dispute.

"The U.S. industry would support settlement based on reasonable Canadian commitments designed to lead to ... timber policy reform in Canada," Steve Swanson of the Coalition for Fair Lumber Imports said in a statement.

The world trade body's ruling, upholding an earlier decision by the WTO, wasn't entirely in Canada's favour.

The WTO panel agreed with an earlier finding by its dispute settlement body that the U.S. Department of Commerce had failed to prove its claim that in some cases, Canadian producers were subsidized.

But it denied Canada's claims that the U.S. has been using incorrect data in its arguments.

And still in dispute is Canada's request for WTO authority to begin $200 million in trade retaliation against the U.S. over countervail duties on certain softwood products, something that Washington is contesting.

The U.S. is still considering whether to appeal Monday's WTO ruling, said a spokesman for the U.S. Trade Representative's office.

"We are studying the report carefully with a view to assessing our options," said John Stubbs, adding Washington is still hoping a new softwood lumber trade deal can be negotiated between the two countries.

Over the past three years, Canada and the U.S. have argued the softwood dispute before numerous WTO panels as well as under the North American Free Trade Agreement.

Canada has won most of those battles but that has had little real effect.

Still, it has helped to lower the value of the combined duties paid by lumber exporters down to about 21 per cent from their high of 27 per cent when duties were first imposed in May 2002.

That's when the U.S. Commerce Department first accepted American lumber producers' claims that Canadian softwood was unfairly subsidized.

Since then, trade officials and politicians from both countries have tried to negotiate a new softwood deal, most recently meeting in late July with plans to resume talks in Ottawa in mid-August.

As well, a pivotal ruling by a NAFTA panel on whether Canadian lumber presents a threat of injury to American mills is expected soon.

If it rules in Canada's favour, analysts have suggested the U.S. will be forced to cancel its combined duties.

Canadian producers sell about $10 billion worth of spruce, pine and fir lumber a year to the U.S. home-construction and renovation sectors, accounting for about 34 per cent of the market.